Maloney: We Must Combat Anonymous Shell Companies in FY2021 NDAA

Jul 9, 2020
Press Release

In light of reports that Ghislaine Maxwell, who was charged in Federal court last week for conspiring with convicted sex offender Jeffrey Epstein to sexually abuse minors, had been using anonymous shell companies to hide her alleged illicit activities, today, Congresswoman Carolyn B. Maloney (D-NY), lead sponsor of the bipartisan, House-passed H.R. 2513: Corporate Transparency Act, asked the House and Senate Committees on Armed Services to include parts of her bill in the Fiscal Year 2021 National Defense Authorization Act (NDAA).

 

In her request to Chairmen Smith and Inhofe, and Ranking Members Thornberry and Reed, the Congresswoman states, “Ms. Maxwell is not alone in this practice. Criminal organizations are notorious for using anonymous shell companies to open bank accounts, launder money, perpetrate fraud, and finance terrorism. Unfortunately, the U.S. is the easiest place in the world to set up anonymous shell companies — no U.S. states currently require corporate applications to provide the identity of the corporation’s true, beneficial owner. My bipartisan legislation, the Corporate Transparency Act, will require companies to disclose their true, beneficial owners at the time the company is formed, and will thus prevent bad actors from using anonymous shell companies to thwart law enforcement and hide their illicit activities.”

 

The Congresswoman goes onto explain that “[w]e’re the only advanced country in the world that doesn’t already require disclosure of beneficial ownership information. Without these provisions, we will continue to facilitate global corruption by remaining a safe haven for human traffickers, drug cartels, terrorists, corrupt foreign officials, illegal arms dealers, and other bad actors. Anonymous shell companies enable them to access money, and therefore, enable their existence. By adding transparency to financial flows, we would greatly weaken the threats that we spend so much energy fighting.”

 

Full text of the letter below and a PDF can be found here.

 

Dear Chairman Smith, Chairman Inhofe, Ranking Member Thornberry, and Ranking Member Reed:

 

As you work on finalizing the Fiscal Year 2021 National Defense Authorization Act, I urge you to include provisions to combat the illicit use of anonymous shell companies included in the bipartisan H.R. 2513, the Corporate Transparency Act. These provisions would help combat one of the most pressing national security problems we face by preventing money launderers, terrorists, and criminals like Ghislaine Maxwell — who has been accused of procuring minors for convicted sex offender Jeffrey Epstein — from hiding their illicit activities and evading justice. 

 

Ghislaine Maxwell — one of Mr. Epstein’s closest friends and confidantes — was arrested in July 2020 and charged in Federal court for her role in helping find and groom girls as young as 14 to engage in illegal sex acts with the late Mr. Epstein and other individuals involved in his sex trafficking ring. Despite Mr. Epstein’s suicide while awaiting trial last year, federal prosecutors continued to investigate his alleged sex trafficking ring and those involved, including Ms. Maxwell. In December 2019, Ms. Maxwell purchased a 156-acre property in Bradford, New Hampshire in an all-cash transaction for $1 million through a limited liability corporation (LLC). According to prosecutors the LLC behind the transaction was anonymized to hide the identity of the person behind the purchase, allowing Ms. Maxwell to evade Federal law enforcement for months, and to avoid being held responsible for her role in enabling the sex abuse of minors.

 

Ms. Maxwell is not alone in this practice. Criminal organizations are notorious for using anonymous shell companies to open bank accounts, launder money, perpetrate fraud, and finance terrorism. Unfortunately, the U.S. is the easiest place in the world to set up anonymous shell companies — no U.S. states currently require corporate applications to provide the identity of the corporation’s true, beneficial owner. My bipartisan legislation, the Corporate Transparency Act, will require companies to disclose their true, beneficial owners at the time the company is formed, and will thus prevent bad actors from using anonymous shell companies to thwart law enforcement and hide their illicit activities. Specifically, this bill:

 

  • Requires corporations and limited liability companies disclose their true, beneficial owners to FinCEN at the time the company is formed.
  • Establishes minimum beneficial ownership disclosure requirements: companies must provide beneficial owners’ name, date of birth, current address, and driver’s license or non-expired passport number.
  • Requires companies to file annually with FinCEN a list of its current beneficial owners, as well as a list of any changes in beneficial ownership that occurred during the previous year.
  • Provides civil and criminal penalties for persons who willfully submit false or fraudulent beneficial ownership information, or who knowingly fail to provide complete or updated beneficial ownership information.

 

We’re the only advanced country in the world that doesn’t already require disclosure of beneficial ownership information. Without these provisions, we will continue to facilitate global corruption by remaining a safe haven for human traffickers, drug cartels, terrorists, corrupt foreign officials, illegal arms dealers, and other bad actors. Anonymous shell companies enable them to access money, and therefore, enable their existence. By adding transparency to financial flows, we would greatly weaken the threats that we spend so much energy fighting. I respectfully request that you include strong language relating to the provisions in my bill, the Corporate Transparency Act, in the FY2021 National Defense Authorization Act.

 

 

cc:           The Honorable Mike Crapo, Chairman

                Committee on Banking, Housing, and Urban Affairs

 

                The Honorable Sherrod Brown, Ranking Member

                Committee on Banking, Housing, and Urban Affairs